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The New Part-Time Economy

The US economy has been showing signs of recovery in the last year, adding 195,000 jobs in June alone, as the labor market advanced despite huge federal spending cuts and tax increases. This may sound nice at first, but the underlying truth to various “recovery” statistics is that the majority of new jobs added are part-time. The BLS’s monthly survey of households says the economy lost 240,000 full-time jobs in June, while gaining 360,000 part-time jobs. Of these, 202,000 private-sector jobs, but 107,400 of them were in the sectors that rely heavily on low wage, part-time employees, such as restaurants, retail trade and employment services.

What is the reason for this change? Well, Obamacare seems to be the primary cause for this economic shift. The Obamacare law requires companies that employ more than 50 people to buy increasingly expensive health insurance for employees; the expenses, as well as the risk of fines if they fail to properly implement complex rules, pressure companies to hire part-timers in place of full-timers. So basically, employers would simply have to turn all their full-time employees into part-time workers, or even replace them. One full-timer could be replaced with three part-timers, and the job reports can look nice and bloated with ‘new jobs’ when these are not necessarily the kinds of jobs that most people can live off of. Obamacare also defines the minimum for ‘full-time’ as 30 hours per week, so the part-time employees would not even be able to work over that amount.

Though the new healthcare mandate has had a significant impact, it is not the only reason for the trend. The general state of the economy also seems to be driving many employers to seek a more part-time oriented workforce. Many economists usually expect businesses to hire part-time workers before full-time workers to test the strength of the economy. In that regard, the growth of part-time workers reflects both the weak economy and its potential improvement. Many existing businesses are willing to restructure their workforces to avoid providing health insurance to their employees, but at the same time, many are also simply trying to weather the economic storm.

So, what are the long-term consequences? The trend indicates that the percentage of full-time jobs in the economy is steadily declining and the percentage of part-time jobs is steadily increasing, with no sign of reversing. This is not a recent phenomenon, but Obamacare and the global financial crisis have accelerated this drift. Some may perceive the trend as a positive; technology has clearly made work more efficient, and if the economy continues to recover, many part-time wages may increase to the point of being a livable wages. People can support their families and work less, a win-win situation. Unfortunately, this is all speculation, and the future doesn’t look quite as bright. Many corporations have realized that they don’t really need us–their employees–anymore, and continue to replace us with technology or with cheap labor overseas. Very few people own their own businesses, or are capable of starting their own, so the middle class will continue to shrink. Is the part-time lifestyle the future? And if it is, will the wages re-adjust to compensate? Or will the 47% eventually become something more like the 87%?